Abstract

This study mainly examines the characteristics of financial distress, earnings management, executive remuneration and low balling simultaneously determine audit and non-audit fees. Single-equation models are utilized in this research for both audit and non-audit fee models by using a sample of listed UK companies in FTSE for the period 2001-2010.

The empirical results reveal that financial distress has negative association with non-audit fees, and cannot fully explain audit fee model; earnings management is negatively related to the audit and non-audit fees; executive remuneration is significantly and positively associated with audit fees, but fails to explain the non-audit fee model; low balling is significantly and negatively corresponding with both audit and non-audit fees.